Essar Energy gets final approval for Indonesian coal block

NEW DELHI: Essar Energy today said it has received final forest approval for its Aries coal mine in Indonesia.

"This is the final approval needed ahead of commencement of mine development activities," the company said in a statement.

Essar Energy acquired a 100 per cent interest in the Aries coal mine in April 2010 for USD 118 million. The mining area comprises approximately 5,000 hectares located in the West Kutai region of East Kalimantan.

A Joint Ore Reserves Committee (JORC) compliant resource assessment estimates that the block contains approximately 64 million tonnes of mineable reserves with an annual potential production of 4 million tonnes of coal, it said.

This is sufficient to provide a dedicated fuel supply to the Salaya I, 1,200 MW coal-fired power plant located in Gujarat, India.

The company has already commenced the construction of supporting road and port infrastructure and it is expected that first coal will be available within 9-12 months from now, it said.

Until coal from the Aries coal mine becomes available, fuel for the Salaya I power project is being supplied under a fixed price coal contract with Essar Shipping and Logistics Limited, Cyprus.

Unit 1 of Salaya I (600 MW), has already entered commercial operations, and unit 2 (also 600MW) is near completion.

"With today's approval, we can now accelerate development at the Aries coal mine to provide fuel for our Salaya I power plant," Naresh Nayyar, CEO of Essar Energy, said.

The company has access to over 500 million tonnes of coal resources across seven coal blocks in India and overseas. This coal is sufficient to provide fuel to 5,250 MW of Essar Energy's power generation capacity.